Dr. Peter Wilton teaches strategy, marketing, and international management at the Haas School of Business, University of California, Berkeley. He has also served as Visiting Professor at Stanford University’s Graduate School of Business and as facul...

Dr. Peter Wilton teaches strategy, marketing, and international management at the Haas School of Business, University of California, Berkeley. He has also served as Visiting Professor at Stanford University’s Graduate School of Business and as faculty at the University of Melbourne and the Australian Graduate School of Management.

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Peter WiltonInnovation can fail for two primary reasons if we're talking about reframing or disruptive innovation. The first reason that can fail is vision risk. Vision is the specification of the customer need. I see a need in the market. I see a need for a better taxi service. That could be an illusion or you might not really define that opportunity clearly enough.
 
You also then have to have the concept of the solution. If we're not going to have a taxi service, what are we going to have? We have the concept of Uber. That's a very specific solution to a very specific problem. You can you misspecify the problem or you can misspecify the solution. That's called vision risk. Now you've got to build it.
 
Can you get away with introducing Uber? Can we convince governments to let us do it? We have [good 00:26:47] Uber tackling governments head on, trying to get permission to do something disruptive to an incumbent. We have the incumbent screaming about all of those unfair advantages that supposedly Uber has. That's called implementation risk. Which of those two is the greatest risk? Typically, it's the vision risk.
 
I like to think about innovation not as a technology problem, not as a technology opportunity but as a business model opportunity where we just take standardized technology and we do something interesting with it and we create a new form of business.
 
How do you minimize vision risk? One of the best ways to minimize vision risk is to be in touch with the lead user in an industry. The lead user is somebody who is very sophisticated about the problems and the solutions in an industry. They're not your customer. They're not your customer because you don't have a solution. This is probably a customer who's going to build the solution themselves.
 
If you look at the antivirus companies, the companies like McAfee and the others that provide software to protect your computer, where do they go to find the next problem? They go to the hacker. The hacker is a lead user. He's not my employee. He's not my customer. He's actually out there looking at problems that I haven't even seen and designing solutions to those problems. These lead users exist in every industry in the world.
 
The trick is to find them and to engage them into a conversation about what is the best imaginable opportunity here and to make them a partner in the innovation process. It's part of this whole concept that nobody has a monopoly on all good ideas. If you're looking for the best ideas in an industry, find the people who have the deepest understanding of the problem and the deepest understanding of the solution and they may or may not be in your customer base.